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Pensions win extra employer payments

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  • Pensions win extra employer payments

GERMANY - Latest statistics compiled by the investment association BVI suggest additional payments made by German employers and designated for investment are more frequently being used for pensions provision.

The BVI noted in its latest statistical update so-called "vermögenswirksame Leistungen" - special monthly investment payments granted by some employers and carrying a special tax status - are shrinking.

The number of investments made by the employer on behalf of the employee has dropped from 4.5 million at the end of 2007 to 3.9 million in 2008, and is seen to be the continuation of a trend witnessed since 2005 when these assets had peaked at 5.9 million.

"One reason for this is in many collective bargaining agreements these payments have been converted to occupational pension fund contributions," the BVI noted.

The organisation also pointed out a greater awareness of the need to save for retirement has continued to be visible in the third pillar, especially regarding the state-subsidised Riester-pension.

That said, growth in the Riester arena has lessened a bit compared to previous years as there are now 2.4 million policies compared with 1.9 million policies in 2007.

Between 2006 and 2007 the number of contracts signed grew by 700,000 - similar to the growth seen the year before.

Officials argue a slowdown in the sale of Riester contracts might be occurring through saturation of the market as not all Germans are eligible to receive the state subsidy.

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com

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